Revolut’s full UK banking licence held up by concerns over global risk controls

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.Revolut’s full UK banking licence is being held up by regulators’ issues over whether or not its danger controls can hold tempo with the speedy progress of its abroad operations.Financial institution of England officers have sought commitments from the fintech group, which has 65mn clients in about 40 nations, that it’ll construct its danger administration infrastructure to match its bold worldwide enlargement plans, based on three individuals conversant in the matter. Revolut, Europe’s most precious start-up, was accepted for a UK banking licence in July 2024 after a three-year wrangle with regulators however stays topic to restrictions throughout a “mobilisation part”. A full banking licence would permit Revolut to enter the profitable UK lending market, placing to work its important buyer deposits. The BoE’s Prudential Regulation Authority, the lead regulator of London-headquartered Revolut, is chargeable for monitoring how banks handle dangers round cash laundering controls, IT techniques and the way a lot capital they’ve. The PRA is scrutinising the robustness of Revolut’s controls each in Britain and internationally earlier than awarding it a licence to function as a totally fledged financial institution within the UK, which is why the method has dragged on for greater than a 12 months, based on the individuals conversant in the matter. Till it exits the mobilisation part and secures the complete licence from the PRA and the Monetary Conduct Authority, the fintech’s banking division is allowed to carry solely £50,000 in whole deposits. As Revolut’s lead regulator, the PRA was conscious that approving a full UK banking licence was prone to set off a wave of comparable accreditations in different nations that might observe its lead, two of the individuals added. On the unveiling of its new Canary Wharf headquarters final month, Revolut introduced plans to enter 30 new nations by the tip of the last decade, as a part of a push to succeed in 100mn clients. On the identical occasion, co-founder Nik Storonsky mentioned that securing a full UK banking licence was Revolut’s “primary precedence” and that it had been a mistake for the corporate to prioritise progress over turning into correctly licensed in its early levels. “After we began worldwide enlargement a few years in the past, we tried to short-cut our banking licences and apply for lighter licences, e-money licences, FX licences, cost licences . . . and it was a worse product,” mentioned Storonsky, who nonetheless owns 25 per cent of the corporate, based on insiders. The PRA says the mobilisation part often takes 12 months, however Revolut has been engaged within the licensing course of for greater than 14 months. Revolut and the PRA have mentioned that mobilisation shouldn’t be a hard and fast interval, and that it may take longer, significantly for bigger and extra complicated corporations. Regardless of awaiting full accreditation in its dwelling market, Revolut has clinched banking licences within the EU, by the central financial institution of Lithuania, and in Mexico. Authorities in Colombia this month gave Revolut the inexperienced gentle to arrange a financial institution however additional approvals shall be required earlier than it may begin lending there.Revolut additionally has its sights set on the US, the place it’s exploring shopping for a financial institution to get entry to a nationwide constitution which is able to permit it to lend in all 50 states, the FT beforehand reported.Revolut declined to remark however pointed to an announcement it made in July wherein it mentioned it was “progressing by the ultimate levels of mobilisation” and was working “constructively with the PRA”. “Given Revolut’s international scale, that is the biggest and most complicated mobilisation ever undertaken within the UK. A radical evaluate is an anticipated a part of the method and getting this proper is extra necessary than speeding to satisfy a particular date,” it mentioned. Revolut mentioned in its annual report, printed in July, that it hoped to safe full accreditation within the UK earlier than the tip of 2025.The PRA declined to remark.